Reso 2006-058 - Laserfiche WebLink

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Net Present Total Nominal Value Cost (discounted at 6%) Other Predevelopment Costs $139,000 $139,000 Predevelopment Loan $727,000 $727,000 Loan for Renovation (maximum amount) $884,000 $884,000 Operating Subsidy (cumulative maximum $5,713,000 $1,937,000 for annual operating deficits through Year 30) Total Agency Cost $12,128,000 $8,352,000 B. Cost Recovery Payments and Revenues to the Agency Under the lease, in Years 1-55 the Developer will pay rent in the lesser amount of $100,000 per year (increased by $2,500 per year) or 75% of Net Cash Flow. However, due to the fact that the Project is expected to run annual operating deficits, it is not currently anticipated that the Developer will make any lease payments to the Agency. As described previously, it is assumed that the Developer will extend the Regulatory Agreement from Years 56-75, and therefore will continue to pay no rent to the completion of the lease term. The Developer is obligated to repay the principal amount of the Predevelopment Loan from proceeds of the Project's construction loan. The principal amount of the Predevelopment Loan is $727,000. The Agency Loan for renovation costs is to be repaid without interest at the end of the 55-year term, or if the Developer agrees to extend the Regulatory Agreement, at the end of the 75-year term. After 75 years, the net present value of the Agency Loan is nominal. At the completion of the 75-year lease term, the Agency will continue ownership of the Property and can re-lease or sell it. While it is expected that after 75 years of operation the building will be of nominal value, the land will have significant value. It is estimated that the current land value is in the range of $1.5 million, or about $50 per square foot. Assuming the land appreciates at the discount rate of 6% per year, the nominal value of the land atter 75 years would be $120 million.